Returning to our running case for Shannon's Brewery introduced in the market share exercise, assume that Shannon's is considering the introduction of a new craft beer called Irish Stout that will be derived from its award-winning Irish Red. Initially, Irish Stout will only be sold "on-premise" at the brewery. Currently, pints of Irish Red consumed on-premise sell for $5.00 per pint with unit variable costs of approximately $2.75 per pint. Variable costs are predominantly comprised of the costs of ingredients and utilities that directly affect the brewing process. The new craft beer will be positioned at a slightly higher price, $5.25 per pint and its unit variable costs will be about $3.25 due to the higher cost of some ingredients. The relevant price, cost, and margin data are below. Irish Red Irish Stout Price $ 5.00 $ 5.25 Unit Variable Costs $ 2.75 $ 3.25 Unit Contribution $ 2.25 $ 2.00 Question 1 10 pts Shannon's Irish Red averages on premise sales of 1,200 pints per month. What is the anticipated profit (contribution dollars) per month associated with sales of Shannon's Irish Red assuming that the Irish Stout is not introduced. Express your answer to the nearest dollar. Do not include the dollar sign. Question 1 10 pts Shannon's Irish Red averages on premise sales of 1,200 pints per month. What is the anticipated profit (contribution dollars) per month associated with sales of Shannon's Irish Red assuming that the Irish Stout is not introduced. Express your answer to the nearest dollar. Do not include the dollar sign. Question 2 10 pts Assume that Shannon's estimates that the sales of the new Irish Stout will be about 250 pints per month, but 21% of these sales will be cannibalized from sales of Shannon's Irish Red. Compute the total combined increase or decrease (incremental change) in contribution dollars for both Irish Red and Irish Stout expected with cannibalization. Express your answer to the nearest dollar. Do not include the dollar sign. Question 3 10 pts 1. Let's stretch a little on this one. Assume Shannon's Irish Red sells 1,000 pints per month in the absence of any cannibalization. Assume also that the new Irish Stout will sell 500 pints per month. The relevant price and cost data are: Irish Red Irish Stout Question 3 10 pts 1. Let's stretch a little on this one. Assume Shannon's Irish Red sells 1,000 pints per month in the absence of any cannibalization. Assume also that the new Irish Stout will sell 500 pints per month. The relevant price and cost data are: Irish Red Irish Stout Price $ 5.00 $ 5.43 Unit Variable Costs $ 2.75 $ 3.25 What will be the maximum percentage cannibalization that can exist before the overall change in contribution dollars becomes negative? Express your answer in percentage form to the nearest percent e.g.; 99.49% rounds down to 99%; 99.50% rounds up to 100%. Do not include the % symbol
